Tuesday, July 21, 2009

October Special Session Coming Into View; Bill's Call But Key Lawmakers Bowing To Inevitable; State Finances Shipwrecked, Plus: The Carruthers Stretch

The outlines of an October special legislative session are starting to come into sight as key players wrestle with one of the steepest economic downturns in state history. State Senator John Arthur "Dr. No" Smith, co-chair of the powerful Legislative Finance Committee, is telling insiders that an October special appears inevitable as state tax collections continue a precipitous decline. ABQ area GOP State Senator Sue Wilson-Beffort, a longtime member of the panel, shares that view. The new willingness for a special began to surface only recently as the downbeat and unrelenting sour economic news shakes even these most experienced New Mexican business and political experts.

The big question for the special which would have to be officially called by Big Bill is: Are we going to have across-the-board cuts to balance the state budget for the fiscal year that started July 1st? Maybe not, says Wilson-Beffort:

"We hope we are not looking into across the board cuts. It is a complex situation, but there are some programs that are not necessary for running state government that could be cut," she told me after a recent LFC session.

Bucket loads of federal stimulus money are slated to be plugged into ongoing government programs like Medicaid to avoid huge shortfalls, but plunging oil and gas revenues continue. Also, Big Bill and Dem Governors know a second federal stimulus bill is politically untenable as R's score points over the already huge federal deficit. One possible worry for the Guv in a special session could be a grab for the NM stimulus money by legislators seeking to divert it to their special projects, but financial circumstances are such it seems the chief executive will have little choice but to call the special.

Gerges Scott, a former journalist and now a communications consultant specializing in energy issues with public affairs company DW Turner, points out:

For every 10 cent drop in the price for a thousand cubic feet of natural gas, the state loses $12 million annually. For every dollar a barrel of oil drops, the state loses $3.4 million.

Natural gas prices have fallen to around the $3.50 level--a stunning crash that is costing the state hundreds of millions in annual revenues. Oil prices at or below $60 a barrel are adding to the financial pressure. And the general recession is causing personal income and gross receipts tax to fall off the cliff. What a mess!

THE TRIGGERWilson-BeffortSolons are bracing for the next official budget projections slated for an August release. Those numbers are now widely expected to be the official trigger for the special session. Lawmakers have a regular 30 day session in January, but Wilson-Beffort says Governor Big Bill cannot act alone and use state reserves to get us through until then. She says the Legislature must authorize the budget-plugging needed now and that's why we are headed for an October special.

Those plunging personal and gross receipts tax collections are caused in part by fearful psychology. New Mexican consumers, like their counterparts elsewhere, have shut their wallets and purses, concerned that it could be their job that is the next to vanish. Throw on top of that the near depression conditions in the ABQ commercial real estate market and you have a state government under increasing pressure to restructure and rid itself of the excesses accumulated during the great bull market that crashed and burned in 2008.

POPULIST WAVE?Smith aka "Dr. No"Some political observers are noting the deepening resentment among rank and file state employees and perhaps the public as well over who will share the burden in balancing the state's stricken budget. By legislative mandate, most state workers have had to increase their pension payments by 1.5 percent, in effect a pay cut for two years. Also, advocates for the huge swath of state residents at or below the poverty level are making more and more noise about those tax cuts for the wealthy engineered by Governor Big Bill and the Legislature in the early part of his tenure. NM Voices for Children, sometimes thought to be on the far-left of the political spectrum, is finding itself more in the mainstream as it calls for a repeal of the Richardson income tax cuts for the wealthy. They are vigorously protesting further program cuts for the disadvantaged.

As rank and file state workers begin to absorb the financial hit, an undertow of populism is evident regarding the outsized salaries for hundreds of political employees, educational administrators and other state positions that have seen their pay scales skyrocket under Big Bill. Outrage is also being expressed over apparent violations of the state's hiring freeze ordered by the Governor. Senator Wilson-Beffort said that issue has been a hot one among LFC members as they question the authorization for exceptions to the freeze.

THE CHAIRMAN Rep. SaavedraThe budget heat is high enough to even set off talk that the chairman of the House Appropriations Committee, ABQ Dem State Rep. Kiki Saavedra, might draw a Dem primary challenger this cycle, an occurrence as rare as a lunar eclipse. While he defends those increased pension payments by rank and file workers as necessary to balance the budget, he has not been heard bemoaning out of whack salaries and bloat in the state bureaucracy or at the University of New Mexico where legislative appropriators have especially close ties. Those ties are coming under increased scrutiny as the economic pain spreads. It is not so much Saavedra's efforts to trim state spending as it is the issue of fairness in spreading the budget pain and causing sacrifice among the elite sacred cows along with the hoi polloi.

Still, taking on a powerful chairman who can administer heavy payback if a challenge fails, could keep potential opponents in the heavy Dem district at bay.

WATCH YOUR WALLET

A tax increase, a bad idea during a recession, not to mention its overall unpopularity, appears unlikely to come out of any October special session. (But let's not take repeal of the tax cuts for the rich or other special tax breaks off the table). There is some $600 million in cash reserves that can be used to shore up the short fall. In addition, key power players are telling me they will again look at money for capital improvement projects that has been laying around and unspent for several years. Lawmakers this year already transferred some of that money to the operating budget. They may repeat that process in the special session. The Legislature has authorized hundreds of millions for construction projects that never seem to get built.

Another year of this depressed economy and the rubber is really going to hit the road. Federal stimulus money and excess dollars still floating around from the golden years are preventing a full-fledged crisis that would force widespread government layoffs and severe program cuts. Chairman Smith and Company hope an economic recovery will kick in before unprecedented action has to be taken. Meanwhile, an anxious public looks on, wondering what programs, salaries and jobs may be cut and whether the politically connected will continue to avoid their share of the burden.

SPIN PATROLGov. CarruthersWe appreciate the home towning of Dona Ana GOP Guv candidate and District Attorney Susana Martinez, and think she'll be a fine contender. And what's wrong with having a Governor from Las Cruces? Jerry Apodaca came out of there to win the Guv's post in 1974 and is generally regarded as a pretty good chief executive. Long ago Guv Ed Mechem also hailed from the southern county. Former Governor Garrey Carruthers claimed the Four Corners as well as Las Cruces as hometown areas in his '86 campaign. He was born in Alamosa, Colorado. (More on that below).

But as endearing as the home towning can be, it doesn't mean we're off the spin watch. And that brings us to a contention of former Governor Carruthers. The dean of the College of Business at NM State University asserted in an ABQ Journal interview that Martinez is better known than Carruthers was at this stage of his campaign for Governor. Garrey sought and won the 1986 GOP Guv nod. He also claimed Susana was more known than Gary Johnson was in the summer before the 1994 GOP Guv primary. Johnson won that race and was elected Governor in November. Here's Garrey's newspaper quote:Carruthers...said (Martinez) is "held in extremely high regard in Dona Ana County as a crusading DA," and has better name recognition now than he or the other recent Republican governor, Gary Johnson, did at this stage of their campaigns.

Garrey may want to review his history. By July of 1985, Carruthers, now 69, had a statewide profile and was a well-known New Mexico political personality. Why? Carruthers served as Special Assistant to the U.S. Secretary of Agriculture from 1974 to 1975, director of the New Mexico Water Resources Research Institute at New Mexico State University, State Chair of the NM Republican Party from 1977 to 1979 and Assistant Secretary of Interior for Land and Resources from 1981 to 1984. It was this well-established resume that put Carruthers in the top tier of GOP candidates for 1986. As well-known as DA Martinez is in Dona Ana County, to say she is as well-known as Carruthers was 10 months before his June primary is, well, a hometown stretch.

GARREY AND GARY Susana MartinezThe Governor Johnson comparison also comes up short in the Carruthers historical test. In July of 1993 Johnson was a multimillionaire contractor who had made a fortune from work his company did at Intel Corporation in Rio Rancho. Granted, he was basically unknown, but he dipped into his personal fortune to buy the name recognition that led to him capturing the 1994 GOP Guv nomination. Martinez does not have the personal fortune Johnson had and will be unable to utilize one to come from nowhere. So it's true Martinez may be as well-known as Johnson was at this stage, but Johnson's money advantage makes the comparison academic. But then Governor Carruthers is now an academic.

All of this is not to say that Susana can't win, only that she is going to need more than hometown boosterism to do it. An unvarnished view of the historical challenge that awaits her and a plan to bring into her tent R's who live outside her home county would seem to be a sensible start.

THE CRUCES CONNECTION

When we think of Governors who came out of Las Cruces we always think of Jerry Apodaca, the state senator who was elected chief executive in 1974 and whose campaign was the first we ever covered. Garrey Carruthers was from Las Cruces when he won the governorship in 1986. but we always felt Garrey ran as a hometown hybrid. He grew up in the Four Corners--on a farm in Aztec--and when he campaigned in '86 he claimed both Cruces and San Juan County as home areas. Kind of like the first President Bush who claimed both Texas and Connecticut as home states. But when he won in 1985, Garrey was a Governor residing in Las Cruces, even if it didn't quite feel that way.

SPOILED ENCHILADAS

As if the recession isn't bad enough news for New Mexico restaurants, it's been an especially rough public relations stretch for the famous Roberto's restaurant in Las Cruces. The city annually hosts the world's largest enchilada festival with the help of Roberto's owner. (I think we earlier blogged that the big enchilada was made at the restaurant, but it is actually done near Las Cruces City Hall). But Roberto's was downgraded by local health officials on the very day that Susana Martinez said she would announce her Guv candidacy there. Since then Roberto's has been upgraded by the health squad. But shortly after that good news, a pick-up truck crashed into the famous landmark. The driver has been charged with aggravated DWI. Said Roberto's owner:

I guess he couldn't wait for enchiladas. And we don't know if he wanted red or green!"WHY WOULDN'T THEY?Rey GardunoAs anticipated, ABQ Mayor Marty Chavez has scored the endorsement of the ABQ Police Officers Association, the union representing the cops. Chavez has been especially generous with salary packages for APD, so their backing was expected. Also, the Democratic mayor will never allow himself to be seen as soft as crime, especially in light of the mass murders discovered this year on the West Mesa and the sensational daylight murder and robbery at a West Side Denny's. However, when we bumped into City Councilor Rey Garduno at the grocery store a couple of weeks, he expressed concerns not often heard among politically sensitive councilors. (The Mayor posted on his Web site a radio spot cut on his behalf by the police union)

Substantial police raises (already negotiated for the current fiscal year) will put a strain on the city budget as tax collections continue to sputter. Garduno says criticism of the police budget has become tantamount to casting aspersions on mom and apple pie. But he points out public safety is consuming an ever larger percentage of the budget. More aggressive oversight is needed, argues the councilor. And he sounds persuasive.

Garduno's is a lone voice on the nine member council where the political implications of appearing "anti-public safety" are too hot to handle. The candidates for mayor join with Chavez in heartily endorsing more and more spending. (City Councilor Ken Sanchez has warned of tighter budget times ahead, and Monday repeated his concerns. Can't the dead-tree media do an update on the public safety budgets?)

Garduno pointed out that a long ago shop-lifting conviction he had and that surfaced during his council campaign in 2007 would surely be brought up if he aggressively pursues a watchdog role. He's probably right, but his willingness to advocate an overdue public debate at a personal cost has a ring of nobility. That's not a word that we have been able to employ much in describing recent events in our still beloved La Politica...